MoviePass Parent Company Files to Spinoff the Struggling Service

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Helios and Matheson Analytics announced it filed with the Securities and Exchange Commission to spinoff cinema discount-ticketing service MoviePass. The news follows the October announcement that the Helios and Matheson board approved a plan to create a subsidiary called MoviePass Entertainment Holdings.

The newly formed wholly-owned subsidiary of HMNY would take ownership of the shares of MoviePass and other film related assets held by HMNY.

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Helios said it would apply to list on Nasdaq or an alternative exchange and would distribute some of MoviePass shares as a dividend to shareholders as of a record date yet to be determined. Helios said it would retain a controlling stake in MoviePass. It first acquired a majority stake in the service in August 2017.

Last spring, the company’s auditor said it had “substantial doubt” about its ability to continue as a going concern, then a July service interruption led to its selling preferred stock and convertible notes. It filed a shelf registration to raise $1.2 billion over three years by issuing equity and debt.

In October, New York Attorney General Barbara Underwood announced she had opened a probe into Helios and Matheson over MoviePass, saying it had mislead investors over the company’s financials, CNBC reported, citing a person familiar with the matter.

The company also faces competition from AMC Theaters, which began a Stubs A-List program that charges a monthly fee that lets customers see three movies per week. In December, AMC said the program has more than 600,000 members.

In December, MoviePass announced it was introducing a new, more complicated pricing structure that was based on geography and viewer preferences.

“We realize that the past year brought our subscribers many modifications and even some surprises, some of which weren’t well received; but we listened, we reassessed, and we believe we are primed to offer the American consumer the absolute best offering across America in 2019 and beyond,” MoviePass CEO Mitch Lowe said in a statement at the time.